Costs in Arbitration Proceedings

Costs serve as major pillar in arbitration, particularly the cost of reference and cost of arbitration. Where time saving is not in-built in arbitral process, it can escalate the costs of the arbitrator. This article reveals the ways in which an arbitrator can save time in the course of arbitral proceedings. This article shows that in recent times critics argue that in reality arbitration is not as efficient as it should be. It is argued in this article that the efficiency of arbitration proceedings depends majorly on the parties and their respective counsels. If the parties connive to extend or complicate the arbitration, the arbitrator’s ability to achieve efficiency would be obstructed. This article states that if the overall costs of the arbitral proceedings is to be minimized, special emphasis needs to be placed on steps aimed at reducing the costs connected with the parties’ presentation of their cases. The increasing and, on occasion, unnecessary complication of the proceedings seems to be the main explanation for the long duration and high cost of many arbitration. The longer the proceedings, the more expensive they will be. However, this article shows that there exist techniques which an arbitrator can use to save time and cost irrespective of the complications posed by disputants.

This chapter explores the types of costs that may be awarded in arbitral proceedings, analysing the underlying principles governing the recoverability of costs in international arbitration. In particular, it focuses on how claims relating to the costs of in-house legal counsel; staff and senior management; and third-party funding arrangements are generally decided by arbitral tribunals. While most arbitral rules expressly allow for the recovery of arbitral costs and reasonable legal fees incurred by external counsel, the position is less clear where the fees of in-house lawyers, lost management time, or third-party funding arrangements are concerned. In theory, in-house counsel fees should be recoverable where parties are able to demonstrate the reasonableness and necessity of these costs. As for management costs, a party should in principle be able to recover such costs in arbitration if it can prove that the time spent on the arbitration caused substantial disruption to its business. Costs underwritten by a third-party funding arrangement should, in principle, be similarly recoverable provided the funding arrangement was agreed at arm’s length and is permitted under the applicable laws.

This paper seeks to explore key issues and challenges impacting trade and business disputes between China and ASEAN countries. Arbitration has become increasingly popular as a dispute resolution mechanism in China and ASEAN, especially with the rise of cross-border transactions and foreign investment. However, there are several challenges and issues associated with arbitration in the region. One major challenge is the lack of uniformity and clarity in the legal framework. There is a diverse legal system in the region, and the inconsistency in the arbitration laws and regulations makes it difficult for parties to agree on the arbitration process. Another challenge is the shortage of qualified arbitrators in the region, which can lead to delays and affect the quality of arbitration awards. The cost of arbitration is also an issue, and the lack of transparency in the cost structure can create disputes between parties, further delaying the arbitration process. The lack of public awareness and education about arbitration is another challenge, which can lead to parties opting for traditional litigation methods. Finally, the lack of transparency in the arbitration process can create mistrust among parties, affecting the credibility of the process. Addressing these challenges will require collaboration between governments, arbitration institutions, and stakeholders in the region to ensure the effectiveness and efficiency of the arbitration process.

A ground often invoked for security for costs in arbitral proceedings is the counterparty’s financial difficulties. Yet, a request on this ground is rarely successful because of one key requirement: That of a significant deterioration of finances. There is a consensus in Swiss doctrine to uphold this requirement for international arbitration. It also appears in domestic arbitration, despite the relevant provision only requiring the appearance of insolvency. However, it is not paralleled in Swiss-based litigation when it comes to security of costs. This article first examines the reasoning behind requiring a significant deterioration in finances. It then seeks to examine the justification of the requirement and proposes an adjusted approach which still seeks to adequately restrict security orders while more fairly dividing the burden of proof.

This doctoral thesis examines the effect of insolvency proceedings on the conduct of international arbitration and whether legislators, arbitral tribunals and national courts adopt a transnational approach to the interaction of these two fields. By adopting a comparative approach, this thesis considers the law and practice in four jurisdictions, namely, Australia, England, Switzerland and the United States, together with the practice of international arbitral tribunals. It is argued that while there are examples of common approaches across the jurisdictions examined, a transnational approach to the interaction between international arbitration and insolvency proceedings does not presently exist. It is also argued that a transnational approach to this interaction is desirable and would likely produce considerable benefits for legal practitioners, the international business community and society more generally by providing greater certainty and predictability, reduced arbitration, litigation and transaction costs, enhanced transparency and greater confidence in the international legal system.

During the arbitration proceedings, two categories of costs may be incurred by the parties. The arbitration costs, which are strictly related to the arbitration proceedings, and the costs which are incurred in relation to parallel proceedings brought before the state courts by the parties. This article discusses the extent to which the costs of arbitration and of such parallel proceedings can be claimed, whether as an item of relief or as damages. The conduct of the parties during the proceedings may have an impact on the allocation of all such costs in both commercial and investor-state arbitrations.

Third-party funding in international commercial arbitration is one of the most current and controversial issues in international arbitration. Third-party funding is the system whereby a third-party funder finances, partly or fully, one of the parties' arbitration costs. In case of a favourable award, the third-party funder is generally remunerated by a previously agreed percentage of the amount of the award. In case of an unfavourable award, the funder's investment is lost. One of the numerous issues raised by the involvement of third-party funders in international commercial arbitration proceedings is arbitrator conflict of interest due to nondisclosure of the involvement of the third-party funder in the process. In this article, we first explain the concept of 'third-party funding in international commercial arbitration.' Then we examine arbitrator conflict of interest implicating third-party funders. Finally, we discuss the need to create an obligation to disclose the involvement of third-party funders in arbitral proceedings as a predicate for arbitrator conflict of interest.

An excerpt from the introductory paragraphs of the article: “The American law of arbitration has for some reason been replete with what we have become accustomed to call ‘trilogies’—and the last two terms of the U.S. Supreme Court have curiously continued that pattern. Once again the Court has handed us three leading cases on closely related themes—and these decisions have turned out in fact to be in many ways the most interesting of the lot [referring to Stolt-Nielsen, Rent-A-Center, and Conception]. All three amount to extended riffs on the Question of Questions, the scope of arbitral power: And so the Court has continued to dip its finger into this rich mixture—compounded of notions of judicial review, ‘arbitrability,’ ‘separability,’ competence/competence, and the preemption of state law—all of our hard-earned lore and learning is there. Undoubtedly for the moment the greatest salience will be with respect to arbitration clauses in contracts of adhesion entered into by consumers and employees—and yet this recent jurisprudence has the potential of sweeping far more broadly. It seems reasonably clear that these cases will continue to generate endless discussion. Things now seem curiously muddled: If our law of arbitration now no longer seems to have any clear unifying theme, any fil conducteur, this suggests that private adjudication—rather than presenting us as it once did with a coherent and self-contained body of doctrine—has become a hostage to a game played out on a larger stage, a pawn of wider, systemic “political” concerns. And so—yet another untoward result — these cases will require the reevaluation of what seemed, for a while, to constitute comfortably settled certainties. Here is at least one step in that direction.”

The expeditious and cost effective nature of arbitration has made it to be largely patronized to the extent that litigation will sooner or later fall into the shadows. In the bid of ensuring that arbitration proceedings are not subjected to the same problems as litigation, arbitrators makes use of certain sophisticated techniques in saving time and reducing costs in arbitration. This article undertakes the Scott schedule as a viable tool in accelerating the arbitral process and saving costs at the same time. This article reveals that the Scott schedule was initially applicable to building disputes but has in recent times being applied to complex disputes in arbitration. It concludes that the basic objective of the Scott schedule is to present the issues contentious between the disputants as clearly as possible and make it resolved without rancor.

Disputes are common in the construction industry. In an ever more litigious society, many of these disputes find their way to the courtroom. Alternatively, many disputes are settled through arbitration—one of several dispute‐resolution methods available. Although several surveys have been taken of attorneys who are involved in the arbitration process, none has examined the contending parties' satisfaction with the process. This paper reports on the results of a survey sent to parties who have arbitrated a dispute to conclusion during a two‐year period from 1986 to 1987. Four general areas of the survey are discussed: arbitrator qualification and performance; administrative procedures; cost of arbitration; and relative advantages and disadvantages of arbitration. Overall, our survey shows the parties to be satisfied with the process. One significant area of dissatisfaction that surfaced was that parties want to see findings of fact to understand the arbitrators' reasoning. This and other issues are discussed along with recommendations for future study.

Lawyers involved in arbitration have doubts about the accuracy of the direction in which the current practice of arbitration is proceeding. One of the main practical issues of arbitration was the issue of conflicts of interest, arbitration costs, the ethos of arbitration. In Poland, arbitration proceedings took too long. The author partly criticizes the provisions of the Act of 10 September 2015 on the amendment of certain acts in connection with the support of amicable dispute resolution methods, which among others concerns the shortening of the post-arbitration proceedings. The legislator adopted defective criteria for determining the venue of court of appeal in cases related to the complaint to set aside the arbitration award.

Arbitration as a dispute resolution mechanism aims to advance access to justice in accordance with Goal 16 of the United Nations Substantiable Development Goals (SDGs). One key issue in arbitration law and practice is the role of third-party funders in fundraising for the arbitration or even litigation process. Third Party Funding (TPF) has grown as a practice of financial responsibility for litigation or arbitration by sponsors that are not parties to a dispute, but whose interest is return for their investment. Such an arrangement may cover major litigation or arbitration costs, as well as other miscellaneous costs. The practice contradicts well established legal principles such as privity of contract and/or complements party autonomy, but the enormous advantages it offers, such as faster access to justice and investment opportunities cannot be ignored. Whilst the concept has developed in advanced countries it is yet to take shape in developing nations like Nigeria. The methodology deployed is doctrinal with primary and secondary sources being the content of Statutes, Bills and Case law. Online sources were also relied upon for secondary sources. The study found that TPF will assist in higher fundraising for litigation and arbitration, that it applies mainly to claimants and will increase access to justice. It is recommended that funds be made available to Defendants too and that developing countries should embrace the practice.

Through “Third Party Funding,” a third party finances the costs of the arbitration process in exchange for a share of the case’s potential outcome. This article covers the historical background of Third Party Funding, its international regulation in investment arbitration, and its impact on the jurisdiction of arbitral tribunals and the admissibility of investment claims. It also addresses several ongoing debates, such as the risk of speculative or meritless cases being pursued, whether Third Party Funding agreements can influence decisions on arbitration costs, and whether the existence and/or terms of such agreements should be disclosed during the arbitral process.

The article aims to analyze the arbitration-related laws in Nepal, the domestication of international arbitration treaties and conventions, settlement procedures of arbitration disputes and the role of the Nepalese judiciary to settle the disputes through arbitration. To settle disputes outside the court through a mutual agreement in a peaceful situation, ADR (Alternative Dispute Resolution) is the best method practiced worldwide since time immemorial; Nepal has also proclaimed various provisions in different statutes and rules. Arbitration Act, 2055 is the current statute that governs arbitration matters and Arbitration (Court procedures) Rule, 2059 governs the court proceedings. The various provisions of Arbitration Laws and Rules have been proclaimed to mitigate the international arbitration laws and rules. Nepalese judiciary especially the supreme court and high court has played a pivotal role to settle the dispute that arose during arbitration, arbitral award, its implementation, the appointment of arbitrator etc. The finding of the study is there have been significant changes in the decision-making process by the court and new trends mitigating the international proceedings have been followed. The analysis is significant as it helps to understand the arbitration laws and procedures and new trends adopted by the courts to settle disputes.

The Essar v. Norscot decision rendered by the High Court of England and Wales in 2016 has opened the door, or at least a window, for the recovery of the full fees of third party funding arrangements in international commercial arbitration. The recoverability of the success fees or premiums payable under a third-party funding (TPF) agreement as costs in arbitration can be criticized on three fundamental and overlapping bases. First, the distinction between funds actually advanced by the third-party funder and a premium is crucial. Secondly, the arbitrator’s discretion is defined and limited by law and should focus primarily on the allocation of costs rather than the definition of the recoverable costs. Finally, an award for the full recovery of third party funding fees should only be made on a clearly defined legal basis. In addition, there are a number of policy considerations which point against the recoverability of the full costs of TPF. The authors recommend modifications to institutional arbitration rules and national arbitration laws to clarify issues related to the recoverability of third party funding costs in arbitration. In the meantime, commercial parties may consider including more detailed contractual provisions to avoid any unforeseen or undesired liability for the costs of TPF.